Reserve Bank of Malawi (RBM) has reduced the policy rate to 12 percent from 13.5 percent effective immediately central bank governor Dr. Wilson Banda has announced.
Making the announcement Friday in Mzuzu, Banda said decision follows a meeting convened by the central bank’s Monetary Policy Committee (MPC) on Thursday in Mzuzu.
“The Monitory Policy Committee at its fourth meeting of 2020 held on November 5 to 6, 2020, decided to reduce the policy rate to 12.0 percent.
“In arriving at this decision, the committee noted that headline inflation has been declining since January 2020 and inflation outlook appears favourable,” said the governor.
Policy rate is a rate at which commercial banks borrow money from the central bank.
RBM governor Banda, who chair’s the Monetary Policy Committee, said the central bank will ensure the implementation of a prudent monetary policy.
Banda said headline inflation has declined from 11.5 percent in January 2020 to 7.1 percent in September 2020 to lower food prices compared to 2019.
The Governor added that non food inflation remains low and stable, anchored by stable exchange rate and energy prices.
He said Covid-19 global pandemic has affected growth domestic product for the country from the projected 5.1 percent to 1.2 percent.